What does ArcelorMittal do?

ArcelorMittal S.A. is the world's 2nd largest steel producer (after China's Baowu Steel), based in Luxembourg. Think of them as a "mine-to-steel" company: they dig iron ore out of the ground (in Brazil, Liberia, Ukraine, Canada), turn it into steel products (flat steel for cars, long steel for construction, tubes for energy), and sell it to customers worldwide. They make €51.7 billion in revenue per year with 155,000 employees in 60 countries. They're basically the "Amazon" of steel — they're everywhere and produce almost everything related to steel.

What does this mean?

B+ grade means "buy with moderate conviction." It's not an A+ (slam dunk buy), but it's a solid opportunity. The stock has already gone up +168% in 12 months, so we're late to the party, but there's still upside potential. The 65% confidence means there's a 35% chance this trade doesn't work out — steel is a risky, cyclical business (it goes up and down with the economy). Value/Cyclical means this is NOT a tech stock that grows forever; it's a "boom-bust" industry that does well when the global economy is strong.

What is EBITDA?

EBITDA stands for "Earnings Before Interest, Taxes, Depreciation, and Amortization." It's a way to measure how much cash the company's core business generates, ignoring taxes and accounting stuff. Think of it as "operating profit before the accountants get involved." For ArcelorMittal, €5.0B EBITDA on €51.7B revenue means they keep about 9.6 cents of every euro as operating profit. That's normal for steel companies (which have thin margins because steel is a commodity — everyone sells roughly the same product).

Simple Explanation

ArcelorMittal is like a giant steel factory that operates in 60 countries. Europe is their biggest market (35%), followed by the Americas (30%) and India/Asia (20%). They also mine their own iron ore (10% of revenue), which gives them a cost advantage — they don't have to buy expensive ore from others. The company is diversified globally, which is good (not dependent on one country), but also risky (exposed to problems everywhere).

What's an Electric Arc Furnace (EAF)?

Traditional steel is made in blast furnaces using coal and iron ore — this emits tons of CO2. An Electric Arc Furnace (EAF) uses electricity to melt recycled scrap steel instead. It's much cleaner (especially if the electricity comes from renewables). ArcelorMittal is investing in EAF technology at their Dunkirk plant to make "green steel." This matters because Europe is forcing companies to cut carbon emissions, and EAF steel will have a competitive advantage under the new EU carbon tax (CBAM).

What is P/B (Price-to-Book)?

P/B = Price / Book Value. Book value is the accounting value of all the company's assets (factories, mines, cash, etc.) minus liabilities (debt). A P/B of 0.86x means the stock is trading for 86 cents on the euro — you're buying €1 worth of assets for only €0.86. This is unusual and suggests the market thinks these assets aren't worth their stated value (maybe because steel is cyclical), OR it's a bargain waiting to be discovered. For ArcelorMittal, the book value per share is €60.30, but the stock trades at €51.90 — an €8 discount. This could be a value opportunity.

What is EPS?

EPS (Earnings Per Share) is the company's net profit divided by the number of shares. It's how much profit the company made "per share you own." If you own 100 shares and the EPS is €1, the company made €100 for you. Earnings surprise is when the company reports higher (or lower) EPS than Wall Street expected. MT beat expectations in 3 out of 4 quarters in 2025, with a massive +57% beat in Q4. That's why the stock jumped — investors love positive surprises.

What is "Float"?

Float is the number of shares available for public trading. ArcelorMittal has 761 million total shares, but the Mittal family owns ~38% (locked up), so the "float" is only ~420 million shares that trade freely. A lower float can mean higher volatility — when demand goes up, there aren't many shares available, so the price jumps faster. It also means the Mittal family has control, which can be good (long-term vision) or bad (less accountability to public shareholders).

Family-Controlled Company

The Mittal family, through Ispat International and Significant Shareholder Group, owns about 38% of the company. Lakshmi N. Mittal is the executive chairman, and his son Aditya Mittal is the CEO. This family ownership ensures a long-term vision (they won't sell the company for a quick profit), but it limits the free float to ~420M shares out of 761M total. Big institutional investors (Vanguard, BlackRock, Capital Group) own most of the rest.

What is Market Cap vs Enterprise Value?

Market Cap = Stock Price × Number of Shares. It's the total value of all the company's stock. For MT, it's €39.5B. Enterprise Value (EV) = Market Cap + Debt - Cash. It's what you'd pay to buy the whole company (you inherit the debt but also get the cash). For MT, EV = €39.5B + €11.3B - €4.6B = €46.2B. EV is a better measure of "total company value" because it accounts for debt.

Is the Debt Scary?

ArcelorMittal has €11.3B in debt, which sounds like a lot. But they also have €4.6B cash, so net debt is €6.7B. Compare that to their EBITDA of €5.0B — the debt-to-EBITDA ratio is 1.3x, which is very manageable. (Banks start worrying above 3-4x.) The company generates enough cash to pay down debt comfortably. The €0.51 dividend (+9%) and ongoing buybacks show management is confident in their financial health. Bottom line: debt is not a problem here.

What is Short Interest?

Short selling is when traders borrow shares, sell them, and hope to buy them back cheaper later (betting the price goes DOWN). Short interest is the total number of shares currently shorted. For MT, only 2.4M shares out of 420M float (0.56%) are shorted — that's extremely low. It means almost nobody is betting against this stock. High short interest (10%+) can lead to "short squeezes" (shorts forced to buy back, pushing price up). Low short interest like MT means shorts are irrelevant here — it's a neutral/bullish signal.

What are EMA, RSI, MACD?

EMA (Exponential Moving Average) is the average price over X days, with recent days weighted more. The 20-day EMA is a short-term trend line, 50-day is medium-term, 200-day is long-term. When price is above all EMAs (like MT now), it's a strong uptrend.

RSI (Relative Strength Index) measures momentum on a scale of 0-100. Below 30 = oversold (too low, might bounce). Above 70 = overbought (too high, might drop). MT's RSI of 65.5 is high but not extreme.

MACD shows trend direction. When MACD line (3.89) is above the signal line (3.49), it's bullish. MT's MACD confirms the uptrend.

What are Support and Resistance?

Support is a price level where buyers tend to step in (price bounces up). Think of it as a "floor." For MT, the first floor is €48.30 (EMA 20). If the stock drops there, buyers will likely buy the dip. Resistance is a price level where sellers tend to step in (price stops going up). Think of it as a "ceiling." For MT, the next ceiling is €55.60 (analyst target). Breaking resistance turns it into new support.

What is EV/EBITDA?

EV/EBITDA is a valuation ratio. It compares Enterprise Value (what you'd pay to buy the company) to EBITDA (operating cash flow). Lower is cheaper. MT's 9.6x means you pay €9.60 for every €1 of EBITDA. Compare to peers: Nucor 8x (cheaper), ThyssenKrupp 15x (more expensive). MT is reasonably valued vs peers, but much cheaper on P/B (0.86x vs 1.8x for Nucor, 2.5x for STLD). This suggests MT is undervalued relative to its asset base.

What is Correlation?

Correlation measures how two assets move together. +1 = perfect lockstep (always move together). -1 = perfect inverse (when one goes up, other goes down). 0 = no relationship. MT has 0.01 correlation with S&P 500 — basically zero! This means MT moves independently of big tech stocks. That's GOOD for diversification — if you own a tech-heavy portfolio, adding MT won't just duplicate your existing risk. MT's negative correlation with Nasdaq (-0.08) suggests it does well when tech rotates out.

What is CBAM?

CBAM (Carbon Border Adjustment Mechanism) is the EU's new carbon tax on imports. Here's the simple version: if you make steel in China (where they don't pay carbon taxes), then export it to Europe, you now have to pay a carbon tax at the border. This makes Chinese steel more expensive in Europe, protecting European producers like ArcelorMittal. It's a HUGE deal — MT estimates CBAM will add €1.35B to their EBITDA (€0.59B in 2026, €0.76B from 2027 onward). Think of it as the EU building a moat around European steel.

The Big Picture

The CBAM is the biggest catalyst for ArcelorMittal in Europe. Combined with tariff quotas (TRQs), CBAM should reduce imports and improve utilization rates for European steel mills. ArcelorMittal estimates this dynamic, combined with ongoing investments, will add €1.35B to EBITDA (€0.59B in 2026, €0.76B from 2027). The phase-out of free EU ETS allowances starting in 2026 accelerates the repricing. This is like getting a "raise" just from policy changes.

What is Beta?

Beta measures how volatile a stock is compared to the overall market. A beta of 1.0 means it moves exactly with the market. MT's beta of 1.65 means if the S&P 500 goes up 10%, MT tends to go up 16.5%. BUT it also means if the S&P drops 10%, MT drops 16.5%. High beta = high risk, high reward. Steel stocks are cyclical — they amplify market moves because their business depends heavily on the economy.

How to Read This Trade Setup

Entry Zone (€47-49): This is where you should BUY. We're waiting for the stock to pull back (drop) from its current €51.90 to around the 20-day moving average. Don't chase it at €52 — wait for a dip.

Stop Loss (€42): If the stock drops below €42, SELL immediately. This protects you from big losses if the trade goes wrong. It's below the 50-day EMA (€43.45), which would signal the uptrend is breaking.

Target 1 (€55.60): If the trade works, sell half your position at €55.60 (Citi's target). That's about +14% profit from €49 entry.

Target 2 (€60.70): Let the other half run to €60.70 (book value), which is +24% from entry. This is the "home run" scenario.

Risk/Reward 1:2.0: For every €1 you risk (entry to stop loss), you could make €2 (entry to target). That's a good ratio.

The Strategy Explained Simply

ArcelorMittal is undergoing a fundamental repricing: profits doubled, CBAM coming to Europe, mining expansion, Dunkirk EAF investment. The P/B of 0.86x is an anomaly for a global leader in a profit growth phase. The optimal entry is a pullback to EMA 20 (€48.30), which is a dynamic support level. Target 1 at €55.60 (Citi target, +14% from €49), Target 2 at €60.70 (book value, +24%). Stop at €42 (below EMA 50) protects against a cyclical reversal. The catalyst is Q1 2026 earnings on April 30, which should confirm the profit trajectory.

What is "Position Size"?

Position size is how much of your total money you put into one trade. If you have a €10,000 portfolio and take a 5% position, you invest €500 in MT. Never go all-in on one stock, especially a volatile cyclical like MT. 3-5% means if this trade goes to zero (unlikely but possible), you only lose 3-5% of your total money. Diversification is key — spread your bets across multiple stocks so one bad trade doesn't wipe you out.